Beaumont Health to temporarily lay off 2,475 workers, cut 450 positions after massive financial losses

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Beaumont Health in Michigan has temporarily laid off nearly 2,500 workers and will permanently eliminate 450 positions due to the COVID-19 crisis. (Pixabay)

Michigan-based Beaumont Health announced it will temporarily lay off 2,475 workers and permanently eliminate 450 positions, becoming the latest system to cut workers due to COVID-19.

The eight-hospital system said on Tuesday that most of the temporary layoffs involve hospital administrative staff and others who aren’t directly caring for patients and most of the 450 positions are part of corporate or administrative roles.

Beaumont’s CEO will take a 70% pay cut and executives will cut their pay by 45%.

“While many front-line employees have never been busier, other parts of our operations have drastically declined or ceased,” CEO John Fox said. “We must make difficult, quick decisions now to protect and readjust to an uncertain future.”

The system will also pause or cancel some nonessential projects but didn’t specify which ones.

RELATED: Moody's: Payers likely to weather the COVID-19 financial storm

Beaumont has been hit hard by the cancellation of elective procedures and low patient volumes of people seeking care for non-COVID-19 cases.

Beaumont lost $278 million in the first quarter of 2020 and operating revenue fell to $1.07 billion, a $78.2 million decline compared to the $1.15 billion reported in the first quarter of 2019, the system said in a release.

Things aren’t expected to get better in the second quarter either, Beaumont hinted.

Other major hospital systems have also faced a cash crisis due to COVID-19, making the next round of stimulus payments critical for hospitals.

Congress included $100 billion in an economic stimulus package passed a few weeks ago to hospitals. The Trump administration has doled out $30 billion of that fund based on historical Medicare spending and more is set to be released in the next week or so.

RELATED: CMS releases guidance on how health systems can restart elective procedures canceled due to COVID-19

Congress is also reportedly in talks over another round of hospital funding as part of a boost to a small business protection program, according to multiple published reports.

“Beaumont will also continue to strongly advocate for federal and state assistance to rescue the health care industry and provide meaningful financial relief,” the system said.

There is a silver lining for Beaumont is that telehealth use has surged dramatically and the system has “new approaches to staffing and a regional perspective to deploy resources and assets,” Fox said.

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